A shirt manufacturer sold 10 dozen shirts per day when the price was $4 per shirt but sold 15 dozen shirts per day when the price was $3 per shirt.Hence, the absolute value of the price elasticity of demand is:

Question

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The price elasticity of demand (PED) is calculated using the formula: PED = (% Change in Quantity Demanded) / (% Change in Price). Here, the quantity demanded changes from 10 dozen (120) shirts to 15 dozen (180) shirts, which is a 50% increase. The price changes from $4 to $3, which is a 25% decrease. Therefore, PED = 50% / 25% = 2, which is greater than 1 but less than 3.

A Shirt Manufacturer Sold 10 Dozen Shirts Per Day When